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KF annual report 2006

1.
Annual Report 2006
The Swedish Co-operative Union (KF)

2.
THIS IS KF
This is KF
The Swedish Co-operative Union (KF) is the union for the coun- Estate), MedMera, KF Invest and KF Föreningsrevision
try’s 54 consumer co-operative societies with around three (Society Audit). As an owner, KF also works to develop the
million individual members. The Swedish Co-operative Union subsidiaries Akademibokhandeln, Bokus, Norstedts, PAN
has two principal roles. One is to be a union for the consumer Vision, Tidningen Vi and Vår Gård Saltsjöbaden. Through KF
co-operative societies, and the other is to be an active owner Konsument (Consumer Affairs), KF works with
of Coop Norden and the wholly owned subsidiaries. In its role lobbying and education on consumer matters to make it
as a union and shareholder, KF contributes to the development easier for consumers to choose products. In 2006 KF main-
of the consumer co-operative retail trade and helps give mem- tained its profitability and financial strength. The profit after
bers of the Swedish consumer co-operative the opportunity financial items totalled SEK 701 million (715). The return on
to buy quality products at affordable prices in attractive shops. equity was 9.4 per cent (9.8) and the equity/assets ratio
One of KF’s primary tasks is to provide specialist expertise 42.9 per cent (42.3).
to the societies through its subsidiaries KF Fastigheter (Real
Subsidiaries Associated companies
Coop Norden 42 %
3 million members
in 54 societies
KF KF
KF Invest Förenings- Shared
revision Services KF Ekonomisk förening
Swedish Co-operative Union, Annual Report 2006 3

3.
THE YEAR IN BRIEF
The year in brief
A strong financial position
KF reported a healthy profit for 2006, with a profit after financial
items of SEK 701 million (715). During the year the net debt was
converted into a net asset of SEK 146 million. This means that KF
has the financial strength required to reverse the negative trend in
the consumer co-operative retail trade.
Positive trend in Coop Norden
Coop Norden’s profit before structural items improved to SEK 296
million (68) in 2006. Coop Sverige more than halved its losses to
SEK -202 million (-491), although it has not yet reached its finan-
cial objectives. KF continues to focus intensively on the recovery
programme that has been initiated. Together with the other owners
of Coop Norden, KF intends to allow Sweden and Denmark’s retail For greater co-ordination and efficiency
chains to return to KF and FDB respectively. The reason for this is KF played an active role, both financially and operationally, in
that Coop Norden will now be run as a joint purchasing organisation. projects designed to push the Swedish consumer co-operative
The transformation of Coop Norden is expected to be completed in movement towards greater co-ordination and efficiency. Examples
2007. of this include KF’s involvement in a logistics company for the
whole consumer co-operative movement, the creation of a Real
Improvements in current operations Estate Fund in order to increase the rate of investment in a co-ordi-
nated, financially attractive way, the modernisation of the retail
Most of KF’s subsidiaries experienced positive growth in 2006. KF
operation, and a joint brand initiative.
Fastigheter (Real Estate) significantly increased its operating profit
and sold half of the Kvarnholmen real estate plot in Nacka to JM
in order to jointly develop the land into a residential area. As a More members
credit market company, MedMera developed the use of the Coop The number of members in the consumer co-operative showed a
MedMera card and other financial services relating to the retail trade. net increase of around 38,000 in 2006, and at year-end there were
The recovery programme in PAN Vision, which started in 2006, 3,037,767 members in the country’s 54 consumer co-operative
has proceeded according to plan. Akademibokhandeln continued to societies. They used the Coop MedMera membership card to make
expand, partly through acquisitions, thus strengthening its market 140 million registered purchases, for which they received reward
position. Bokus was also successful, increasing its market share by 8 points entitling them to 6.6 million reward vouchers. In total mem-
percentage points to 31 per cent. bers redeemed SEK 395 million worth of vouchers during the year.
Five-year summary, the KF Group
Sales (SEK billion) Assets (SEK billion) Proﬁt after ﬁnancial items (SEK million)
35 20 1100
1000
30 900
800
15
25 700
600
20 500
10 400
15 300
200
10 100
5
0
5 - 100
- 200
0 0 -300
02 03 04 05 06 02 03 04 05 06 02 03 04 05 06
4 Swedish Co-operative Union, Annual Report 2006

5.
MESSAGE FROM THE PRESIDENT
Message from
the President
In what is generally a very healthy global economy, Sweden and the
other Nordic countries have been experiencing exceptional
growth, especially in the retail trade. The forecast for 2007 indi-
cates continued healthy growth of around five per cent in mature
economies, and more than seven per cent in the new economies.
At the same time, changes in our shared living environment
have become a major global concern. Threats from the greenhouse
effect are particularly alarming, and are stimulating an urgent dia-
logue on the sustainable development of society. These issues can-
not be resolved on a national level, but require global co-ordina-
tion and understanding. Everyone can make a real difference in
daily life by making educated choices when it comes to goods and
services.
A focus on sustainable development
Consumers’ awareness when shopping will be a key factor in terms
of better development. In the UK, fair trade already generates rev-
enues of approximately SEK 340 billion. In the future, consumers
will place even greater demands on companies to adhere to high
ethical standards and practice sustainable development. Issues that
call people to action, such as environmental resources and energy,
are at the very heart of the consumer co-operative’s objective for a
sustainable society. Issues relating to future food production, ani-
mal welfare and the effects of new technology affect almost all con-
sumers. New knowledge is necessary to navigate an increasingly
large and complex assortment of products. It has always been the
mission of the Swedish consumer co-operative movement to
assume an active, supportive, and constructive role in this process.
The consumer co-operative must offer products in modern, movement towards greater co-ordination and efficiency. Examples
affordable shops with good service and a clear sustainability pro- of this include KF’s involvement in a joint master brand and a
file. In the future, we want this profile to be a natural result of our logistics company for the whole consumer co-operative movement.
confidence in being able to live up to the needs and expectations of In addition, KF created a real estate fund in order to increase the
many people. rate of investment in a co-ordinated, financially attractive way, and
it also modernised the retail operations. New financial services, a
2006 was an eventful year new customer magazine, and new attractive offers for members
KF’s healthy financial results further strengthened its financial were launched via the Coop MedMera card during the year. KF
position in 2006. The profit after net financial items totalled Fastigheter (Real Estate) designed and built modern shopping
around SEK 700 million. KF has no debts and has an equity/assets malls.
ratio of approximately 40 per cent. This means that KF is well It is pleasing to note that the number of members continued to
equipped to face the upcoming years’ needs for a concentrated increase in 2006, now totalling over three million. Members
effort in the retail trade in Coop Sverige and the retail societies. received approximately SEK 395 million in reward discounts,
Most of the wholly owned subsidiaries grew fully in line with which can be viewed as a kind of refund. The consumer co-opera-
expectations. Coop Norden did not meet KF’s expectations or tive’s successful development aid operations raised a total of SEK
owners’ requirements of profitability at the same level as its com- 20 million during the year through the Swedish Co-operative
petitors. Coop Norden’s profits improved during the year, albeit Center (Kooperation Utan Gränser) and Vi-skogen (Vi Agroforestry
from a low level. In the future, demands for profitability and Programme), making it one of the most successful fundraising
growth will increase significantly for all companies. operations in Sweden. The consumer co-operative has a fifty-year
KF played an active role, both financially and operationally, in tradition of taking concrete action to improve the future for the
projects designed to push the Swedish consumer co-operative less fortunate.
6 Swedish Co-operative Union, Annual Report 2006

6.
MESSAGE FROM THE PRESIDENT
A new Coop Norden become involved in influencing the product range, prices and
After five years, Coop Norden is now entering a new phase. During quality. This requires clearly defined values and a philosophy that
2007 it will be transformed into a business solely focused on pur- makes the consumer co-operative the first choice for many people.
chasing, thus creating an opportunity for new partners to increase The pace of change will accelerate in 2007 and the years ahead will
the synergy benefits with greater purchasing power throughout require hard work. Courage, drive, leadership and sustainability
the Nordic region. The change will also result in lower costs. The will be central concepts. KF must represent both stability and the
aim is that the retail chains in Sweden and Denmark should return ability to change. The business must be profitable. Effective busi-
to their national owners’ organisations, KF and FDB respectively. ness development, independence, and freedom to act are all gener-
This transformation will take place in stages in order to achieve a ated by strong profitability.
high level of consensus between Coop Norden’s owners KF, FDB
and Coop NKL. Certain Nordic development matters, such as own
brands, will continue to be managed within the framework of the Stockholm, March 2007
new Coop Norden. Collaboration will take place solely on the basis
of commercial considerations.
Vision for the future
The Swedish consumer co-operative will regain its position as a
Lars Idermark
strong, well-invested, efficient and attractive retail operation. It
President and CEO
will clearly stand for sustainability and a future-oriented, efficient
retail structure in which consumers can express their views and
Swedish Co-operative Union, Annual Report 2006 7

7.
KF’S STRATEGIC DIRECTION
KF’s strategic direction
KF is responsible for implementing and developing the democratic influence of its members.
The consumer co-operative’s business concept
“ …The consumer co-operative shall enable its members to use their consumption to contribute towards a society characterised by economic development, eco-
logical sustainability, social trust and collaboration. This shall be achieved primarily through:
• The sale and provision of goods and services that, on the basis of members’ requirements and preferences, provide economic, ecological and social added value.
• Skills, development and information that gives members a basis on which to plan their purchases and their finances.
• Lobbying on consumer issues…”
From KF’s statutes
The consumer co-operative’s objectives KF’s role and mission
• A profitable, competitive, consumer co-operative retail trade in The Swedish Co-operative Union (KF) has two principal roles. One is
Sweden that offers clear benefits for members in addition to to be a union for the consumer co-operative societies, the other is to be
affordable prices and quality products with an ecological, an active shareholder of Coop Norden and the wholly owned sub-
socially sustainable, health-oriented profile. sidiaries. In its role of union and shareholder, KF contributes towards
• A well-informed, satisfied, and active group of members who use the development of the consumer co-operative retail trade and helps
a consumer co-operative shop as their primary shopping outlet. to give members of the Swedish consumer co-operative the opportu-
• A profitable, financially strong KF. nity to purchase quality products at affordable prices in attractive shops.
8 Swedish Co-operative Union, Annual Report 2006

8.
KF’S STRATEGIC DIRECTION
The role as a union that the structure of the societies is developed. The trend towards
KF is the union for Sweden’s consumer co-operative societies. There fewer, but stronger regional societies is expected to continue. KF
are 54 consumer co-operative societies around the country, which also works to make sure that Coop Sverige and the societies
are in turn owned and controlled by approximately three million increase their co-operation in order to utilise the benefits of scale in
individual members. Five of the consumer co-operative societies do everything from purchasing, product range and pricing philoso-
not have their own retail operations, but are run within Coop phy to the design of shops and concepts.
Norden. The other 49 societies run their own retail operations. KF also represents the consumer co-operative movement in var-
ious bodies at both a national and international level. KF has cho-
In its role as a union, KF has three primary tasks: sen to review its memberships for 2007 in various national organi-
• to develop and manage forms of membership influence sations, prioritizing those organisations in which membership is of
• to offer specialist expertise and business development central importance for the co-operative’s business concept.
• to manage financial assets
Management of financial assets
The Group’s financial assets are managed by KF Invest, which
Membership influence
manages approximately SEK 5 billion. The portfolio is managed
KF is responsible, in partnership with the consumer co-operative
primarily in-house, with a heavy emphasis on interest-bearing
societies, for creating and implementing a framework for member
securities. Apart from the securities portfolio, KF manages a real
democracy. The highest executive body within KF is the General
estate portfolio through KF Fastigheter with a market value of
Meeting. Every year the Board of KF issues invitations to regional
SEK 5.7 billion.
conferences ahead of the General Meeting, to give the societies an
Since 1908, through KF Sparkassa (Savings Association) KF has
opportunity to participate in an in-depth dialogue about KF’s
been offering members of the consumer co-operative the opportu-
operations.
nity to save at a competitive interest rate.
Societies that do not run their own retail operations, the so-
called member interest societies, exercise their influence over retail
operations through KF’s ownership of Coop Norden. They take
part in regular consultations with KF and Coop Sverige to discuss
matters relating to business operations.
Specialist expertise and business development
One of KF’s main tasks is to offer specialist expertise to the con-
sumer co-operative societies and Coop Norden.
MedMera AB is a subsidiary of KF with responsibility for the
rewards scheme and the card business. It also conducts active
development projects in the field of customer relationship man-
agement (CRM) to support the consumer co-operative trade in its
contacts with members.
KF Fastigheter (Real Estate) is a subsidiary that serves as the
consumer co-operative’s centre of expertise on real estate matters, and
sells consultancy services to Coop Norden and the retail societies.
KF Föreningsrevision (Society Audit) is a subsidiary that offers
the consumer co-operative societies specialist expertise in the field
of audits. The company also conducts market and profitability
analyses for the retail societies.
KF Konsument (Consumer Affairs) is a skills and co-ordination
body in the parent company that handles consumer matters
together with KF, Coop Sverige and the societies in order to create
the right conditions for members to make conscious consumption
choices.
As the union for the consumer co-operative societies, KF must
also encourage the retail trade transformation being driven by the KF Konsument creates the right conditions for members to
societies. In order for this transformation to occur, it is necessary make conscious choices in their consumption.
Swedish Co-operative Union, Annual Report 2006 9

9.
KF’S STRATEGIC DIRECTION
The role of active owner
As the owner, KF must work to develop its wholly owned sub- The consumer co-operative’s background
sidiaries. This work is done through Board commitments, clear
expectations in terms of profitability and prioritisation, and run- The consumer co-operative movement was created at
ning analytical support. In 2006 the financial ownership require- the end of the 19th century as a response to social
ments were further clarified and tightened for all businesses. problems of the time in terms of a shortage of goods
KF’s objective is that all wholly owned subsidiaries and the and poor quality, while merchants enjoyed trading pri-
associated company Coop Norden shall achieve and maintain mar- vileges. By joining forces and buying goods together,
ket profitability and yields, be competitive in the long term and and by trading in goods, the idea was that members’
contribute to realizing the consumer co-operative’s business con- fundamental needs for good-quality products at low
cept of sustainable development of society. In January 2007 the prices with a sufficiently wide product range would be
Board of Coop Norden made a decision that will change the busi- satisfied.
ness’s future direction (see text box on page 11).
The co-operative movement’s basic principle remains
Coop Norden the same today. Modern, profitable, value-oriented tra-
As the biggest shareholder in Coop Norden, KF encourages ding must also contribute towards the sustainable
healthy, profitable development of the company by working with development of society.
the other shareholders to form specific requirements, draw up
business and capital supply plans, pursue management issues, and
generally work as an active Board.
Coop Norden has experienced poor growth in profitability,
10 Swedish Co-operative Union, Annual Report 2006

10.
KF’S STRATEGIC DIRECTION
especially in Sweden, since its formation in 2002. Coop Norden is Owner control
not satisfying the owners’ financial and market requirements.
Therefore, a transformation process has been initiated for Coop KF is a significant owner of companies that operate in
Norden. KF has increased its demands on the company and has for- the Swedish and Nordic retail trade, with a focus on
mulated for the years ahead clear financial targets that are in line FMCGs. KF’s influence in associated companies and
with comparable businesses. In the next few years KF also intends subsidiaries is based on its shareholding, as well as on
to work harder to clarify the consumer co-operative profile in the trust and expertise. On this foundation, KF acts as an
retail trade. active owner in order to find means of guaranteeing
KF is also contributing financial strength, expertise in the field good, long-term development and increasing the value
of business development and, through the subsidiary KF of the shareholding.
Fastigheter, real estate expertise to develop the retail locations for
all of the Swedish consumer co-operatives, including Coop Sverige. Active ownership is exercised by Boards of the compa-
nies and through an ongoing dialogue with KF and
Subsidiaries senior representatives of the companies. KF has
In addition to the businesses in the retail trade, KF owns a number drawn up shareholder requirements for all companies
of media companies. In 2006 KF changed the Group structure for in the form of financial objectives and a structured fol-
these companies. The bookstore businesses Akademibokhandeln low-up procedure based on the companies’ business
and Bokus, the book publishing house Norstedts Förlagsgrupp, plans. Follow-up of the companies’ performance is
PAN Vision with its operations in the field of home entertain- regularly communicated to each company’s Board in
ment, and the magazine Vi are linked directly to KF in both opera- order to ensure that the company is performing accor-
tional and strategic terms. The purpose of the change is to make it ding to plan.
possible to a greater extent to adapt measures for each of the indi-
vidual companies to increase profitability and reinforce growth. In its role as an owner, KF demands a competitive mar-
ket return in line with comparable businesses, while
also requiring that all business activities adhere to co-
operative principles and values, which are formulated
in the statutes and in the guiding value document the
Compass.
New forms of co-operation
within Coop Norden in 2007
In January 2007 the Board of Coop Norden made the
decision to initiate a transformation of Coop Norden
into a business solely focused on purchasing. At the
same time Coop Norden’s owners are working to
develop the ways in which the national operating com-
panies in Sweden, Denmark and Norway are to be
restored to each country.
This transformation is expected to lead to more
clearly defined, more efficient management of the pur-
chasing business and the retail chains, as well as
improved profitability through stronger synergies.
Swedish Co-operative Union, Annual Report 2006 11

11.
COMMITMENT TO THE ENVIRONMENT
Commitment to the environment
KF has a long tradition of commitment to the environment. This create an ecologically sustainable environment in the form of a
commitment is an expression of KF’s values as specified in the green belt around Lake Victoria as well as good living conditions
Compass, the consumer co-operative’s shared values and beliefs, for families of small farmers. In 2006 total income was around SEK
and in KF’s statutes. During the year KF started a collaboration 60 million, of which SEK 29 million comprised a subsidy from
with the Tällberg Foundation, and simultaneously renewed its SIDA. Collections raised around SEK 23 million.
membership in the Swedish Centre for Business and Policy Studies
(SNS). KF has also become a member of the Fair Trade Label International partnerships
Association in Sweden, and has initiated a partnership with the KF is a member of the International Co-operative Alliance (ICA),
Swedish Society for Nature Conservation. which was formed in 1895. ICA is an international popular move-
ment that represents co-operatives all over the world and provides
Swedish Co-operative Center (Kooperation Utan Gränser) them with, among other things, information. ICA’s members are a
KF’s commitment to giving development aid is a long-term task number of national co-operative movements in a broad range of
going back almost 50 years. In 1958 KF founded the Swedish sectors: banking and insurance, agriculture, health, real estate,
Co-operative Centre (SCC), one of the very first development aid industry and FMCGs. 222 organisations from 91 countries were
organisations in Sweden. SCC is a non profit organisation that pro- members at the end of 2006. ICA represented 800 million mem-
vides aid for development in countries with widespread poverty. bers through these organisations. This makes ICA the largest pop-
The organisation has over 60 member organisations, including KF, ular movement in the world. Cooperatives Europe, a regional asso-
Coop Norden, Riksbyggen, LRF, HSB, Folksam, OK, Swedbank ciation within ICA, which has 171 member organisations distrib-
and Lantmännen. uted across 37 European countries was formed during the year .
This support is based on the co-operative movement’s basic There is also a consumer co-operative interest organisation,
principle that local inhabitants themselves must be able to shape Euro Coop, in which KF is represented. Its aim is to develop joint
development and work their own way out of poverty with the help standpoints and policies on matters relating to health and food
of co-operative companies or farmers’ organisations. SCC works by products from the consumer’s perspective, and to stimulate the
providing advice, training and support to local organisations. sharing of experience and co-operation between the consumer
Development aid is concentrated on farming and rural develop- co-operatives in Europe.
ment. In Sweden SCC works extensively with communication and
PR activities in order to ensure that global issues are raised at home. Tällberg Foundation
It has activities in 26 countries. Total revenue in 2006 was more In 2006 KF decided to initiate a collaboration as one of the main
than SEK 200 million. Fundraising collected almost SEK 33 million. sponsors of the Tällberg Foundation. The main activity is the
Tällberg Forum, an annual global conference where 400 statesmen
Vi-skogen (Vi Agroforestry Programme) and leaders from the areas of politics, science, business, voluntary
KF formed the “Vi planterar träd” (We Plant Trees) foundation in organisations, culture and media from all over the world gather to
1983 based on an initiative in the Vi magazine. The original idea discuss the overall strategic issues that business and society in gen-
was to plant trees to prevent erosion. The activities now are far eral are facing. The theme of the 2006 conference was sustainable
broader, although in this age of accelerating climate change its growth from a global perspective. The purpose for KF is primarily
basic principle is more important than ever. Vi-skogen’s vision is to to take part in a future-oriented, public discourse about the sur-
vival of the earth and what is required for changes in consumption
and production, but also to make valuable contacts.
The Fair Trade Label Association
Since 2006 KF has been a member of the Fair Trade Label
Association in Sweden. There are over twenty organisations behind
the association in Sweden. The purpose is to contribute towards
fairer global trade and a globally sustainable society by improving
the conditions for producers in the poorer parts of the world. The
organisation develops criteria for Fair Trade labelling and enters
into agreements with Swedish companies on the sale of products.
Checks on both producers and licensees are performed on an ongo-
ing basis. The organisation also works with communication and
PR activities. Sales of Fair Trade products in Sweden have
12 Swedish Co-operative Union, Annual Report 2006

12.
COMMITMENT TO THE ENVIRONMENT
The co-operative movement’s
collection and aid activities
In 2006 the consumer co-operative contributed around
SEK 20 million to development aid activities. KF incre-
ased its aid from 50 öre per member of the consumer
co-operative to 1 Swedish krona per member. This
amount, which has been divided between the Swedish
Cooperative Center (Kooperation Utan Gränser) and Vi-
skogen (Vi Agroforestry Programme), corresponds to
a total of SEK 3 million, compared to SEK 1.5 million in
the previous year. Coop Sverige and most societies
also contributed 3 öre for every carrier bag sold and
gave priority to the Swedish Cooperative Center’s col-
lection boxes at the in-store checkouts.
Development aid by
auto rounding-off
”Bistånd på köpet”
In October 2001 we
launched Bistånd På
Köpet through the
Coop MedMera card.
Members with a Coop
MedMera Account can
automatically round up payments to the nearest whole
SCC is a non profit-making organisation that provides aid for develop- krona, and thus contribute towards co-operative aid.
ment in countries with widespread poverty. The organisation has over The money is shared between the Swedish
60 member organisations, including KF, Coop Norden, Riksbyggen, Cooperative Center and Vi-skogen. At the end of the
LRF, HSB, Folksam, OK, Swedbank and Lantmännen. year 126,250 members had signed up to Bistånd På
Köpet, which collected more than SEK 3 million in aid
during 2006.
increased by around 40-50 per cent per annum in recent years.
Sales of Fair Trade products in Coop Sverige’s shops more than
doubled in 2006. The Development Aid Button ”Biståndsknappen”
Since the end of 2004, in many of Coop Sverige’s
KF Project Center shops and in an increasing number of the retail socie-
ties’ shops, consumers have been able to make a new
The KF Project Center was formed by KF in 1986 as a “network
kind of donation to the Swedish Cooperative Center
company”. Since 2000 it has been owned by Koopi, of which KF is
and Vi-skogen. Instead of getting a receipt from the
a part-owner. The business supports the development of co-opera-
machine for returnable bottles, which can be taken to
tive organisations and strengthens democracy and member value in
the checkout to exchange for cash, there is the option
its business partners. The concept is to offer practical “know-how” of pressing the “Development Aid Button”. The money
in the form of organisational development and training. The KF is then sent directly to the aid organisation. In 2006
Project Center is run on a non profit basis and collaborates with a almost SEK 4.5 million was collected via
number of aid organisations. The business concentrates primarily Biståndsknappen.
on Asia, as well as Eastern and Central Europe.
Swedish Co-operative Union, Annual Report 2006 13

13.
EMPLOYEES
Employees
The KF Group operates mainly in Sweden. In 2006 there was an Strategic skills development
average of 1,347 employees, 42 of whom were employed in the In 2006 work started on the development of a strategic skills
parent company, KF Parent Society. Most employees are in development plan at Group level. The plan aims to cover any skills
Stockholm. The average age of Group employees was 43. gaps and develop employees in all functions within the Group.
KF is an organisation with strong values. Faith and pride in the Within the framework of the strategic plan, a joint system for
unique business format combined with the fundamental values of courses and training, the KF Academy, will come into force during
Honesty, Consideration, Influence and Innovation must permeate
the next year. The aim is to have a central function that can offer
the business. The practical application of these values must con-
and quality-assure courses that employees will be taking, and to
tribute towards ensuring that the KF Group is, and is perceived to
more clearly adapt training programmes according to roles and
be, an attractive, highly regarded employer.
jobs in the organisation.
The strategic direction is defined at Group level on the basis of
In 2007 KF will be preparing to reintroduce a trainee pro-
the consumer co-operative movement’s values. The Human
gramme, as well as intensifying other efforts to improve opportu-
Resource Director is a member of Group Management. Joint
nities for internal transfers and careers in order to to guarantee the
Group strategies and activities are then adapted and implemented
availability of skills in the future.
in the subsidiaries’ businesses.
Human Resource work in the KF Group in 2006 was concen-
trated in four areas: strategic skills development, leadership, being Leadership
a good employee and keep-fit & health. Work on equality is strate- The starting point is that leadership in KF must be characterised
gically important in KF, and the company strives to achieve an by openness, transparency and clarity. All managers at KF must be
equal distribution between men and women by actively targeting role models and ambassadors, and strive to ensure that employees
this in all workgroups. By the end of 2006, 65 per cent of all can actively develop, contribute, perform and deliver results.
employees were women. 42 per cent of people in a managerial posi- KF is undergoing a generation shift, and at the same time the
tion were women, and 20 per cent of those in Group management labour shortage will be a fact within a few years. The management
were women. of the future is a highly relevant question for KF, and for this rea-
14 Swedish Co-operative Union, Annual Report 2006

14.
EMPLOYEES
son during the year the company took part in a comparative survey
about successful leadership of the future, which was conducted by
the consultancy company Kairos Futures.
In 2006 the Managers’ Forum was set up, which brings
together the companies’ managers twice a year to attend a seminar.
Participants have the opportunity to share experiences, to discuss
how KF’s values permeate each business and to listen to external
presentations. All newly-appointed managers in the KF Group
also undergo a management programme featuring labour law and
communication, with an emphasis on the dialogue between man-
ager and employee. The aim of the programme is to reinforce the
managers in their role as leaders and to make use of the expertise
and knowledge that exists within the company. In 2006 a total of
about 20 people participated.
Being a good employee
Being a good employee means creating involvement within the
Group, and for the individual employee it also means playing an
active role. The aim is to achieve effective interaction between the
organisation, management, the team and the individual, in which
each party has his or her own responsibility. It is KF’s aim that each
employee must have individual development objectives and per-
formance objectives, which are followed up twice a year.
Satisfied employees are one of the keys to success. The employee
index is currently being used in some of the subsidiaries.
Constructive feedback is converted into concrete, relevant action
that aims to improve employees’ perception of the workplace, their
work and management, and of the physical and psychological
working environment. As from next year the employee index will
be introduced throughout the whole Group.
Keep-fit and health
Work in the field of keep-fit and health is conducted on the basis of
KF’s keep-fit and healthcare policy, with the aim of encouraging at
least ten per cent of employees to become actively involved in the
company’s keep-fit activities. In operational terms, the work varies
somewhat between companies, but the starting point is the same:
efforts must be targeted in a preventive way using a combination of
activities. All of the Group’s companies have links with external
occupational healthcare schemes, which focus primarily on preven-
tive measures such as ergonomics, education and health profiles.
The sports club that was formed in Stockholm in 2005 has contin-
ued to grow in popularity, while at the same time there has been
increased collaboration with keep-fit centres.
Swedish Co-operative Union, Annual Report 2006 15

15.
CONSUMPTION PATTERNS IN SWEDEN
Consumption patterns in Sweden
Gaining an understanding of customers’ consumption patterns, buy. Labelling of products to facilitate conscious consumption and
preferences and expectations is a prerequisite for the consumer co- reporting of how companies are meeting their social responsibilities
operative to maintain competitiveness in the retail trade. It is also thus become central issues.
fundamental for the whole consumer co-operative concept. Through
its own environmental analyses and interpretations of these, KF has Environmental awareness
identified a number of changes in consumption patterns and values Increasing concern about and awareness of climate change have cre-
that will affect the retail trade in future. ated a much higher level of involvement in environmental issues. In
2006 environmental and climate changes came under the spotlight
Consumption as a lifestyle as a consequence of many high-profile initiatives, including the
Society has become individualised in the last 30 years. Having Swedish documentary film “Planeten” (“The Planet”), in which over
grown up as part of a specific group with common values, today’s twenty of the world’s most prominent scientists were interviewed,
generations now enjoy freedom, but also pressure to create their own and the Stern report entitled “The Economics of Climate Change”.
identity. The creation of identity and belonging has to some extent Sale of organic food in Sweden is increasing far more rapidly than
been shifted from production to consumption. other ranges, with a figure of almost 15 per cent in 2006 compared
Consumption is not just about physical content and function, but to around 7 per cent for foods in total. More and more companies are
also about the identity it creates and the messages it conveys. Politics adapting their activities towards achieving sustainable development.
and influence are less about traditional party membership and asso- The American chain Whole Foods, which specialises in organic and
ciation meetings, and more about personal attitudes that are ethical foods, is one of the fastest-growing FMCG chains in the USA.
expressed in lifestyles and consumer choices. Climate change will probably be a dominant political issue in the
As this emerges, conscience-based consumption, environmental decades to come and will affect consumption patterns at many levels.
awareness and ethics are important aspects of how and what people
Trust and authenticity are closely associated with the trend for reassurance; one example is the increased interest in food labelling.
16 Swedish Co-operative Union, Annual Report 2006

16.
CONSUMPTION PATTERNS IN SWEDEN
intensive period of family responsibility with a career, followed by a
relatively long second period of freedom as an active pensioner.
Separations and new family structures also mean that people are
changing lifestyles and consumption patterns. Another long-term
change is that Sweden now has a high degree of ethnic diversity.
Analysing and adapting a business to produce general, broad cus-
tomer categories is becoming increasingly difficult. Consumer mar-
kets are becoming more and more differentiated, with some players
focusing on low prices, some on a broad product range and others on
exclusivity or specialist niches.
Consequences for the co-operative retail trade
These general shifts in consumption and value patterns will have
ongoing, significant effects on all players in the consumer market.
Sales of organic foods in Sweden are growing
far more quickly than other ranges. As a consumer co-operative FMCG player, with the fundamental
values on which the business is based, the consumer co-operative’s
product range needs to be increasingly characterised by considera-
Time and health
tion of issues relating to the environmental, health and justice, as
Another change underway that is being reported in many surveys of
well as local production. At the same time, the range of goods on
values and consumption is the increased focus on individual health.
offer must be up-to-date and competitive, with quality products at
In a report entitled “Organic Food – strategic base information for
affordable prices.
the food industry”, the Swedish Consumer Council pinpoints health
and nutritious foods as being increasingly important considerations
for modern consumers. In 2004 the Swedish Institute for Food and
Biotechnology decided, in response to a request from food compa-
nies, to set up a network of companies to meet the growing demand The Swedish FMCG sector in 2006
for healthy foods.
In an age of ever-increasing choice, time is perceived to be the The consumer co-operative is the second largest
scarcest resource. Goods and services that offer more perceived free player in the Swedish FMCG sector. In recent years
time are increasingly in demand. This trend indicates a continuing there has been greater competition and price pres-
shift towards semi-manufactured products and ready meals in the sure, even if the rate at which soft discount players
food sector, towards time-saving shopping channels and towards opened new shops slowed down in 2006.
ways of becoming involved as a member that are time-efficient or are
defined as a positive experience and may therefore take some time. There was a very strong increase in sales in the
Another time-saving aspect is solutions that help with the search for Swedish retail trade in 2006. This trend was strongest
information before various consumption choices. in the consumer discretionary sector, which reported
a sales increase of 8 per cent. The rate of increase
Reassurance and credibility was a little lower in the food sector, at around 7 per
Globalisation, terrorism and climate threats generate a counter cent.
response in the form of an increased need for reassurance in the local
environment. Trust and genuineness are also closely associated with Players in the hypermarket segment performed will
this trend towards a need for reassurance. One example is an during the year, followed by the hard discount sector,
increased interest in food labelling. An attitude survey conducted by which continued to win market shares. The consumer
KF in spring 2006 revealed that three out of every four consumers co-operative’s market share of the FMCG sector was
believe that the information on packaging about the product’s origin 21.6 per cent (22.5)*.
is of great significance when choosing a product.
* Does not include, kiosk, marketplace and walk-in sales.
From nuclear family to the mobile individual
There are about two million single households in Sweden, corre-
sponding to almost half of all households. Life’s phases have shifted,
and this has resulted in a longer period of freedom and youth, an
Swedish Co-operative Union, Annual Report 2006 17

17.
THE CONSUMER CO-OPERATIVE’S CONSUMER WORK
The consumer co-operative’s consumer work
Consumer work at KF takes the consumer co-operative’s business Consumer information
concept as its starting point. The aim is to encourage skills devel- Consumer information is provided primarily through KF’s website
opment that provides members with base information to use when and the publication of a series of information brochures entitled
planning their shopping and their finances, to conduct lobbying “Worth knowing”. The brochures, which are published in partner-
activities on consumer matters and to encourage the co-operative ship with Coop Sverige, reflected current aspects in the four sub-
movement to provide products with economic, ecological and jects featured during the year. In autumn 2006 an intense initia-
social added value. In 2004 KF Konsument (Consumer Affairs) tive was undertaken to increase the exposure of “Worth knowing”
was established to gather specialist expertise and to run the co- in the shops. In due course consumer information will be devel-
operative’s consumer work more efficiently. oped and will also be run on an interactive basis with members
over the Internet.
Building opinion
Building opinion is an important element of KF’s activities, and is
undertaken both internally and externally. Internally the main tool
is a newsletter that is sent out three or four times a year to the sub-
sidiaries’ management groups and to the societies. Externally, in
2006 building opinion work mainly took the form of consumer
surveys and contacts with authorities and other organisations on
various issues such as food labelling and sustainable consumption.
KF also submitted responses to a number of consumer-related
propositions, including the new EU directive on organic produc-
tion. Since September 2006 KF has been supporting a research
project at Uppsala University into food and the significance of
meals for democracy and integration.
Influence on product range and choices
KF Konsument influences the product ranges and choices in the
shops in the consumer co-operative movement by reviewing poli-
cies and directives. This work has been undertaken at a pan-Nordic
level in collaboration with FDB and Coop NKL. The issue of food
labelling has a high priority in this work. In 2006 efforts were
focused primarily on checking the labelling of own brands, which
involved a review of the information content of labels and the clar-
ity and intelligibility of the information.
Consumer work in the future
Efforts in the next few years will target the development of sustain-
In autumn 2006 an intense initiative was undertaken to increase the able consumption, and this is the focus of the activities that the
exposure of “Worth knowing” in the shops. consumer co-operative will be organising during 2007. The focus
on consumption is becoming increasingly important in contribut-
ing towards a sustainable society, and there is growing demand for
Support and co-ordination of activities healthy and organic products. Within the framework of this initia-
Co-ordination and support give the consumer co-operative soci- tive, in 2007 KF will be publishing an issue of “Worth knowing”
eties’ activities in the consumer field greater impact. In 2006 the about organic production in collaboration with the Swedish
consumer co-operative organised common activities in four areas Society for Nature Conservation and conducting consumer surveys
under the general umbrella title of “Healthy eating and good into the importance of sustainable consumption. Two important
health”. One of the activities undertaken involved presentations on development projects on educating parents and food hygiene will
special subjects, which attracted about 3,000 people. In total also feature in work in 2007. In the future KF’s intranet and its
around 50,000 people were involved in the societies’ activities, website will both be developed, as they represent important chan-
which included meetings, presentations and training days. nels for greater dialogue and collaboration.
18 Swedish Co-operative Union, Annual Report 2006

18.
THE CONSUMER CO-OPERATIVE SOCIETIES
The consumer co-operative societies
Foto: Göran Assner/Johnér
Foto: Sven Halling/Johnér
Foto: Sven Halling/Johnér
Foto: Istockphoto
The consumer co-operative societies are members of KF and form Axmarby, Oskarström and Östbjörka.
the basis of the consumer co-operative movement. At the end of The retail societies have active member operations, and in vari-
the year there were 54 societies in Sweden with around three mil- ous ways they gather members’ views on the retail trade.
lion members in total. There are two different kinds of society, Operations also include building opinion and education with an
with all societies running a business at a local/regional level. emphasis on retail issues.
Combined sales (excluding VAT) for the retail societies totalled
Retail societies SEK 15.9 billion. During the year the number of members
The retail societies, of which there were 49 at the beginning of the increased, and at the end of the year totalled 1,159,412.
year, run everything from one single shop to several within various
chain profiles. In 2006 all retail societies entered into agreements Member interest societies
to follow the concepts and chain profiles Coop Konsum, Coop During the 1990s the five consumer co-operative societies
Forum, Coop Nära, Coop Extra and Coop Bygg. In the past the Stockholm, Svea, Solidar, Väst and Norrort transferred their retail
shops had profiles and concepts that were different in some trade to KF. Since 2002 operations have been run within Coop
respects from that of Coop Sverige. Norden. These five societies represent 60 per cent of members.
To make further use of the synergy benefits between Coop Activity in the member interest societies focuses mainly on issues
Sverige and the retail societies, a decision was made to set up a of membership and consumer issues.
joint Swedish logistics company, Cilab. The new logistics company The member interest societies have exercised their influence
handles national purchasing, product range and logistics, and in over the retail trade through KF’s holding in Coop Norden. They
due course is expected to generate additional significant reductions channel the members’ influence in shops and hypermarkets
in purchasing and logistical costs, thus boosting the co-operative through shop councils, regional councils and retail councils. The
movement’s competitive strength. councils act as forums for consultation between the societies, Coop
There was evidence of decisions made to increase the rate of new Sverige and KF on matters that affect the business operation and
shop openings when a number of societies opened new shops and also serve, among other things, to add knowledge of local condi-
hypermarkets. Several efficiency measures, such as mergers of soci- tions. In 2006 discussions centred primarily on Coop Sverige’s
eties and the introduction of more efficient personnel planning sys- business and the shops’ accessibility in various locations around the
tems, were also implemented during the year. Rationalisation country. There has also been a focus on consumer matters, with
measures will continue in future to play an important role in rein- joint initiatives for Fair Trade products and on the subject of “Food
forcing the competitive strength of shops and hypermarkets. from all over the world”.
The merger between Konsum Nord and Konsum Jämtland on During the year the number of members increased, and at the
1 January 2006 made Konsum Nord the biggest retail society. end of the year totalled 1,878,355.
Three smaller societies were closed down during the year:
Swedish Co-operative Union, Annual Report 2006 19

21.
MEMBERSHIP INFLUENCE
Membership influence
KF is owned by 54 Swedish consumer co-operative societies with stituencies. Every year the societies in a constituency appoint rep-
around three million members. Membership is open to all. resentatives to a constituency meeting. The principles for appoint-
Membership means that members are indirect owners of KF, which ing the representative are regulated in KF’s statutes, and are based
gives them various ways of influencing the co-operative business. on the number of members in the societies. The purpose of the
As well as the consumer co-operative societies, seven OK unions, constituency meetings is to elect representatives and deputies for
Folksam Liv, Folksam Sak and Fonus are direct members of KF. KF’s General Meeting and to nominate members for the meeting’s
KF’s statutes define the principles of KF’s operations. election committee. The constituency meetings appoint a total of 94
representatives for KF’s General Meeting. The distribution of these
representatives is determined on the basis of the number of members
in each society. The ordinary constituency meetings must be held no
later than six weeks prior to KF’s Annual General Meeting.
Information and discussion
To give all societies the opportunity to receive information, to con-
duct a dialogue on relevant matters and to participate in discus-
sions before KF’s General Meeting, every year KF’s Board, in accor-
dance with the statutes, holds regional conferences. Four such con-
ferences were held in 2006, in Växjö, Uddevalla, Stockholm and
Luleå. A special representatives’ seminar is also held on the day
before KF’s Annual General Meeting. This year’s theme for both
the regional conferences and the representatives’ seminar was how
a modern, future-oriented consumer co-operative movement can
be developed for the 21st century.
KF’s General Meeting
KF’s Annual General Meeting is held every year before the end of
June. The meeting comprises 101 representatives. Of these, 94 are
appointed at the consumer co-operative societies’ constituency
Various kinds of members’ panels on the Internet enable members to meetings. The remaining seven representatives are appointed by
give their views directly on various consumer and member issues.
the other members in accordance with a special election procedure
drawn up by KF’s Board.
The consumer co-operative societies are In accordance with KF’s statutes, the meeting must be
the foundation on which KF is built informed of KF’s activities, finances and future plans, and about
Each society’s statutes are based on KF’s so-called template statutes, the consumer co-operative in general.
but are adapted to the society’s conditions. The fundamental prin- In addition to the presentation of the annual report and the
ciple for member control is that every member has one vote. The auditor’s report, among other things the meeting adopts KF’s
society’s General Meeting is the highest decision-making body, income statement and balance sheet, and passes a resolution on dis-
corresponding to a limited company’s annual general meeting. The charge from liability of the members of the Board and the
meeting elects the Board, auditors and an election committee. At President. The meeting also passes resolutions on fees and other
the meeting members also take a view on the past year’s operations remuneration to KF’s Board based on a proposal from KF’s election
and any motions submitted by members. In smaller societies all committee.
members can be invited to a joint society General Meeting. Larger
societies first have district General Meetings, which elect a repre- KF’s General Meeting also appoints:
sentative for the society General Meeting. In 2006 almost 50,000 • Members of KF’s Board and deputies for these based on propos-
members took part in various district and General Meetings. als from the election committee and nominations from the soci-
eties
Constituency meetings • The election committee’s chair, deputy chair, three members
Each consumer co-operative society is a part of a constituency. The and three deputies on the basis on proposals from the Board
division into constituencies is defined by KF’s General Meeting based on nominations from the societies’ constituency meetings
based on a proposal by KF’s Board. In 2006 there were ten con- • The audit company and two elected auditors
22 Swedish Co-operative Union, Annual Report 2006

22.
MEMBERSHIP INFLUENCE
95 representatives attended KF’s General Meeting on 25 April bers the opportunity to vote, not only at the traditional members’
2006. In addition to the agenda, which is regulated in KF’s meetings, but also on the Internet and via local voting stations.
statutes, the meeting dealt with three motions about interactive The Göta Consumer Co-operative Society implemented a major
membership views, Fair Trade products and the future of the con- change by introducing new owners’ representatives, whose job it is
sumer co-operative. The meeting decided to: to help members have an influence in the society.
• Assess the introduction of interactive membership views in Recent years have also seen the development of members’ panels
order to develop member value and customer information in the consumer co-operative societies, Coop Sverige and KF.
• Move towards stronger marketing and an extended range of Various kinds of members’ panels on the Internet enable members
Fair Trade products to give their views directly on various consumer and member issues.
• Assign the Board to report back with a schedule and methods
for an organised dialogue on the future of the consumer co-
operative
At the meeting KPMG was elected to be the registered audit com-
pany for two years.
New forms of influence
The development of participation in societies’ activities has led in
many areas to a review of existing forms of member democracy and
influence. During the year many of the consumer co-operative
societies have overhauled these.
For example, the Väst Consumer Co-operative Society changed
its statutes with a view to creating more direct influence for its
members instead of having several layers of representation. All The Väst Consumer Co-operative Society changed its statutes with
a view to creating more direct influence for its members instead of
members were invited directly to participate at the 2007 General
having several layers of representation.
Meeting. Formal, statute-related tasks are also being reduced in
favour of inviting members to take part in current consumer affairs
and in local activities and meetings relating to shops. Coop Norden – control and influence
The Svea Consumer Co-operative Society changed its statutes
to the effect that there was a reduction in the number of formal lev- In 2006 Coop Norden’s General Meeting comprised for-
els of decision-making representation. The Stockholm Consumer mal representation from each owner, representing their
Co-operative Society has for a few years been trying to give mem- own society in proportion to ownership: KF 42 per cent,
FDB 38 per cent and Coop NKL 20 per cent. The Board
consists of 15 members, comprising five members from
KF, four from FDB, three from Coop NKL and three mem-
Local and regional councils bers who represent employees. A consultative meeting
was arranged in May 2006 with a total of 200 partici-
In consumer societies without their own retail operations, pants from KF, FDB and Coop NKL to discuss current
influence over the shops is exercised through various issues relating to Coop Norden’s business.
councils. It is the task of member/shop councils, which A conference was held in 2006 to discuss how KF, FDB
consist of 3-5 elected representatives, the shop mana- and Coop NKL can channel owner influence to make use
ger and 1-2 employees to conduct a dialogue with mem- of consumers’ interests in product ranges and choices.
bers and to monitor the shop’s commercial operations. Within the framework of this, policies and guidelines were
The regional councils are the consumer co-operative discussed on the shops’ product ranges and choices.
societies’ consultative bodies with the management of KF In January 2007 the Board of Coop Norden made the
and Coop Sverige. The regional council discusses mat- decision to initiate a transformation of Coop Norden into
ters that affect business operations in the society’s area a joint purchasing organisation. At the same time Coop
of activity. The council gives the societies a general influ- Norden’s owners are working to develop the ways in
ence and provides knowledge of local conditions. The which the national operating companies in Sweden,
corresponding consultation process at national level Denmark and Norway can be restored to each country.
takes place between all member interest societies, KF This transformation will also mean new forms of control
and Coop Sverige at the retail council. and influence in the future.
Swedish Co-operative Union, Annual Report 2006 23